Thursday, September 17, 2009

Japan Seeks To Broaden Aerospace Industrial Skills



Japan Seeks To Broaden Aerospace Industrial Skills


Decades of constitutional restrictions on Japan’s military and regional competition for subcontracting work has created the most uneven aerospace industry in Asia — and one that may need new skills to compete with mainland producers.

Steven McGuire of Britain’s University of Bath, author of the 2006 report, “The United States, Japan and the Aerospace Industry,” said the outlook for the aerospace industry in Japan for the next five to 10 years will be mixed.

“I get very mixed views about Japan’s industry. The heavies enjoy solid international reputations, which reflect both their technological and management strengths, and history as reliable partners in international collaboration,” he said, “The second- and third-tier players seem less impressive, at least in the eyes of Western firms. There is a view that Japan’s pacifist foreign policy has rather stunted the technological development of all but the most international of Japan’s aerospace firms.”

Japan appears relentlessly dedicated to big, expensive military aircraft programs despite cheaper, proven foreign alternatives. Part of the reason is job creation, but another reason is the industrial spinoffs such programs foster.

The most recent example is Japan’s military aircraft program for a new cargo (C-X) aircraft and a maritime patrol (P-X) aircraft. Despite cheaper cargo alternatives such as the C-130 Hercules, the C-27J Spartan, the revamped U.S. P-3 Orion and the upcoming 737-based P-8A Poseidon Multi-Mission Maritime Aircraft (MMA) program, Japan insists on creating its own aircraft regardless of expense, redundancy or delays.

“These do deserve some attention because the state is putting up a staggering amount of money for development — even while the United States is developing its own next-generation cargo and patrol platforms, like the P-8 MMA,” said Peter Woolley, author of the book, “Geography and Japan’s Strategic Choices.”

“Such a huge program suggests that Japan does not see in the long run any less need for a vigorous ASW [anti-submarine warfare] and other surveillance patrols. And the C-X implies that the government expects the role of the SDF [Japan Self-Defense Forces] in peacekeeping operations abroad will become normalized if not routine.”

Increased defense spending by Japan is expected to serve as a useful “countercyclical lift” to the aerospace industry.

“The civil game may be entering the top of its cycle,” McGuire said. “Overall, however, the industry looks set for solid growth for the next five to 10 years. Asian economic growth underpins this, as it does for so many other sectors.

“As for partnerships, I cannot see Japanese firms going it alone except in small subsectors. They will need to team with Western defense contractors to have any hope in big markets like the Middle East,” he said.

Subcontract work from Europe and the United States accounts for most of the business for major Japanese firms. The Boeing 787 Dreamliner is expected to provide Japan with most of its work for many years.

“I am interested to see whether this pushes Japan, especially the METI [Ministry of Economy, Trade and Industry] and the Ministry of Defense, toward an even greater emphasis on high-technology niche products and a greater willingness to partner with a wider range of overseas partners,” said McGuire, who argues that the U.S.-Japan link has been a great strength, but also reflects “vulnerability.”

Vulnerabilities include concerns in Japan that the rapid improvement of China’s technological capabilities will soon threaten to supplant Japan in certain subcontracting areas.

Though the growth of Asian aerospace, both civil and defense, puts all Asian industries in a strong bargaining position, they are also competing with each other to varying degrees.

China is seen as a major new player in the aerospace industry competition in Asia. China’s cheap labor and increasingly sophisticated and experienced aerospace manufacturing techniques and technicians will force Japan, South Korea and Taiwan to become more competitive.